Interview :Bram Hendrata
What does the domestic market hold for food and beverage (F&B) and entertainment companies?
BRAM HENDRATA: The massive expansion of the middle class in Indonesia can be considered the main growth driver for F&B and entertainment companies in recent times. At the turn of the century this segment was almost non-existent. Now it’s growing at a rapid pace, thus leading to the increasing number of shopping centres in Jakarta. Outside the capital, the growth of the middle class correlates with huge, untapped opportunities in cities like Surabaya and Medan.
Although spending power in secondary cities is not as high, people are well informed about the latest products and lifestyle trends. This is mainly thanks to the influence of social media, which increases exposure to products that are otherwise out of reach. Social media affects the way people behave, with people in major cities becoming more interested in food than ever before. Now people not only want food, but they also want to have the total lifestyle experience, in which food is just one component. However, it is a two-way street. While social media affects the market, the market also affects us. Competition is higher than ever for lifestyle companies. We need to be able to differentiate ourselves by offering unique products and experiences. It is important to keep customers excited by bringing artists and performers with mass appeal to perform at events that can merge food and music in an innovative way.
What are the biggest challenges to hosting concerts and events in the entertainment sector?
HENDRATA: Bureaucracy remains one of the main issues. Regulations in Indonesia can be quite complex. Not many people – even those with years of experience – have a complete understanding of all the necessary licences and permits required by different agencies. If we had a simplified system with a centralised agency for all licences and permits it would benefit the whole lifestyle industry. Another challenge is the perception that, due to the political scene, Indonesia is more vulnerable to social dynamics than other countries in the region, which sometimes leads artists to charge higher fees. These costs are further increased whenever there is a logistical burden, which complicates and delays the passage of equipment through ports and customs. During these hold-ups artists may need additional days before moving on to perform in another city. Lastly, in terms of venues, there is a lack of suitable locations. Our infrastructure is not yet ready to host extremely large crowds. If we can develop this capability, it would not only help boost tourism, but also help us take advantage of the large, young domestic population, which is very keen on attending these kinds of events.
How can the government promote and attract more investment in new tourism destinations?
HENDRATA: The government’s strategy of developing 10 New Balis is a great initiative, and Indonesia has amazing destinations that can compete with other beautiful islands around the world. Nonetheless, with the exception of Bali and a few other places like Lombok, many hotels are still underdeveloped and not ready to provide the level of service expected by international travellers. There is also an imbalance in terms of development: Bali has too many hotels, while in more exotic destinations such as Labuan Bajo in Flores, infrastructure and connectivity are still major issues. This greatly affects the F&B industry since access to a sustained base of premium ingredients can already be quite challenging in major centres like Jakarta, let alone in more remote parts of the country.
Overall, the potential is definitely there. More people are travelling to new tourism destinations outside of Bali. The main challenge is to find ways to keep that tourism sustainable throughout the year by greatly improving infrastructure in those places. This would allow for steady tourism growth in the future, and when this happens, investment will most certainly follow.
Read More from OBG
